Nonalcoholic steatohepatitis (NASH) characterized by liver steatosis with hepatocellular injury and inflammation is a potentially serious condition with up to 25% of patients progressing to cirrhosis with complications of portal hypertension, liver failure, and hepatocellular carcinoma. NASH is highly prevalent in patients with type 2 diabetes (T2D) and is an escalating health problem due to the global epidemic of T2D. Currently, control of lipids by diet and exercise is the only approved treatment; but long-term effectiveness is questionable because many patients are unable to comply with the required dietary and lifestyle changes, emphasizing the need for an effective pharmacotherapeutic approach. The thiazolidines and vitamin E can improve liver histology in NASH patients; but they are handicapped by formidable adverse effects. The investigational agent, obeticholic acid, has been shown to improve the biochemical and histological features of NASH; but drug safety requires further evaluation in the light of potentially adverse effects on blood lipids. A new compound, ARI-3037MO, can reverse the elevation of the enzyme markers of liver damage in hyperlipidemic hamsters and reduce circulating triglycerides and body weight. ARI-3037MO is a synthetic analog of nicotinic acid (NA), which itself has been reported to reverse hepatic steatosis in a hyperlipidemic model. NA significantly reduced liver lipid in a small clinical trial but clinical acceptance in NAFLD/NASH patients is unlikely given its association with hepatoxicity, impaired insulin sensitivity, and flushing. ARI- 3037MO does not interact with the high affinity receptor for NA, GPR109A, which mediates the latter two adverse effects; but, preclinically and clinically, ARI-3037MO retained beneficial effects on lipid levels and inflammation. ARI-3037MO did not impair glucose control, cause flushing, or show any signs of hepatotoxicity in human phase I trials, suggesting feasibility as a drug candidate in NAFLD/NASH. The next step is to examine efficacy in NAFLD/NASH patients with moderate biopsy-proven steatohepatitis in a 6-month study. The Specific Aim is to demonstrate that ARI-3037MO reduces intrahepatic lipid content and improves liver function via beneficial changes in liver function tests. In order to advance into a placebo-controlled, proof-of- concept phase II clinical study in NASH patients (SBIR phase 2), ARI-3037MO must meet specific Benchmarks: 1) at least a 33% reduction in intrahepatic lipid content measured by MRI spectroscopy, and 2) a 25% or greater reduction in the alanine transaminase marker of liver disease. A study director at an advanced clinical site (Beth Israel Deaconess Medical Center), a homogeneous study population selected by liver histology indicative of reversible disease, and the safety profile of ARI-3037MO provide confidence that the study can be successfully executed to yield definitive, measurable outcomes.